Dealers Unwind Carry Trades As Dollar Rallies

Dealers were unwinding carry trades in which market participants had sold off the U.S. dollar and bought the higher-yielding Mexican peso because the greenback appreciated.

  • 25 Mar 2005
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Dealers were unwinding carry trades in which market participants had sold off the U.S. dollar and bought the higher-yielding Mexican peso because the greenback appreciated. The dollar rallied against the peso last Monday in anticipation of the Federal Reserve Board's interest rate hike to 2.75% from 2.5%, but declined slightly Tuesday after the U.S. Labor Department reported inflation rose by 0.4% from last month.

Traders were chasing the spot market last week, where the dollar rose to about MXP11.22 Monday, up from about MXP10.98 two weeks before, while one-month implied volatility rose to 8.2% from 7%.

Michael Gavin, head of Latin America economic research with UBS Securities in Stamford, Conn., said the U.S. Treasury market was driving the activity, with yield on 10-year Treasury notes rising two weeks ago to almost 4.6% from 4% in early February. Last week yields on the 10-year bonds reached their highest level since June at 4.65%.

A trader said volumes were light due to the upcoming long weekend. The previous week speculative players had boosted volumes through purchasing short-dated dollar calls and peso puts after dealers were caught with short option positions in a strengthening dollar environment.

  • 25 Mar 2005

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 18 Jul 2017
1 Citi 244,235.70 910 8.87%
2 JPMorgan 223,767.95 1021 8.13%
3 Bank of America Merrill Lynch 211,276.97 750 7.68%
4 Barclays 166,062.82 634 6.03%
5 Goldman Sachs 162,877.27 537 5.92%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 HSBC 25,385.87 103 7.10%
2 Deutsche Bank 25,125.19 81 7.03%
3 Bank of America Merrill Lynch 22,023.57 59 6.16%
4 BNP Paribas 18,766.65 109 5.25%
5 Credit Agricole CIB 18,157.63 105 5.08%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 18 Jul 2017
1 JPMorgan 12,578.87 55 8.17%
2 Citi 11,338.07 71 7.36%
3 UBS 10,682.06 44 6.93%
4 Goldman Sachs 10,419.53 53 6.76%
5 Morgan Stanley 10,194.88 57 6.62%